Ikea, eBay Avoid Paying UK Taxes, Reports Allege

Avoiding taxes is all the rage these days, especially among major companies.

Ikea and eBay are two of the latest to face scrutiny over accusations that they’re avoiding taxes while still profiting in the country. The claims come after a Reuters investigation revealed that Starbucks paid no corporate income taxes in the UK over the past three years, even though the coffee chain made 1.2 billion pounds in the country during that period.

eBay only paid about 1 million pounds in taxes to the British government, despite making nearly 800 million pounds in the country during the year, the Sunday Times reports. The scheme may seem outrageous, but it’s not really at all; the online retailer is legally avoiding taxes by funneling its money through Luxembourg and Switzerland.

Ikea allegedly managed to cut its UK tax bill in half by sending profits off to another country in the form of payments to a sister company, according to the Guardian. Ikea has been accused of avoiding taxes in other ways too; the company’s finances are set up in such a way that allows some of its profits to go to a charity, minimizing Ikea’s tax bill and greatly benefitting the furniture chain’s founder and his family, according to a 2006 investigation by The Economist.

Though UK lawmakers are increasing scrutiny on corporate tax evasion, the issue extends across the pond as well. Thirty of America’s most profitable companies paid less than zero in income taxes between 2008 and 2010, according to a report from the Citizens for Tax Justice released last year.

Corporate tax avoidance also has become a flashpoint on the presidential campaign trail. Republican nominee Mitt Romney has proposed a territorial tax system, which would allow companies not to pay very much in taxes on what they earn overseas. Under the current system, companies are responsible for paying taxes on the money they earn overseas, a system that multinational companies sometimes exploit.

Vice President Joe Biden slammed Romney’s proposal in his speech at the Democratic National Convention in March, saying it would create 800,000 jobs -- all of them overseas. As it turns out, that claim may have been a bit overblown.